The Supreme Court on Monday began hearings as it gears up to pronounce its final verdict in the coal block allocation scam. Last week, the court had declared 218 coal blocks allocated since 1993 as "illegal" and "unconstitutional". Arguing for the government today, the attorney general asked the court not to scrap all the coal blocks.
Mukul Rohatgi on his part said that it would not be appropriate to cancel all the coal blocks. He has asked the Supreme Court also to come out with a ruling fast so that decision making is not delayed and the government can actually expeditiously move towards auction of blocks.
Indeed that was at least the flow of sentiment that one got after hearing Mukul Rohatgi, the Attorney General appearing for the government. He made it abundantly clear that the government was in-principle opposed to the idea of having de-allocation on mass as was an indication earlier that was of course a fear. However, Mukul Rohatgi caveating that suggestion with another suggestion, suggesting that 46 mines – 40 that are already operational, 6 that are expected to be commissioned be spared be exempted from possible de-allocation given the implication that it would have on the plants that are already making use of coal from these particular mines. That was of course the suggestion that came forth.
Furthermore, Mukul Rohatgi added that as a penal provision perhaps these companies, the power companies in particular should be asked to pay Rs 290 per tonne of coal use since the point of commissioning to recover the loss that had been incurred to the state exchequer and that was of course the figure that had been cited by the CAG and moving forward that these power companies be asked to get involved, to participate through a multi-lateral arrangement to arrive at a power purchase agreement (PPA) so that there is parity and the benefits get passed on to the end consumers. That was the take as far as the government was concerned.
The power producers of course were a concerned lot. They in fact put forth the argument that the court should be wary of causing widespread havoc as far as the power sector is concerned. They pointed out that it would have far reaching consequences, not just on the power sector but also on various banks, on the financial sector which have extended loans to the tune of thousands of crore as far as these power sector companies are concerned.
The court took these concerns onboard and in fact hinted that it was open to the idea of granting these power companies the right of first refusal if and when these mines go in for further auctioning. That was of course one concession that Supreme Court appeared to be open to granting as far as power companies are concerned. However, the Supreme Court also made one very critical observation that of all these 218 coal mines even if made operational the total coal output would not be more than 7 percent of India's total coal demand and hence the observation, hence the idea, hence the hint there perhaps that de-allocation on mass is not completely off the books or is not completely off the table as far as Supreme Court is concerned. Of course, the Supreme Court as of now as directed all parties to make their final submissions via affidavits.
The government will have to make its submissions with respect to the 46 coal mines and will have to put that on affidavit. The power companies on their part will have to put forth data as far as investments in various coal mines, as far as various plants are concerned. That of course is due on September 9, which is when we will see further hearing.
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